These Bay Area cities are poised to break into the million-dollar home market

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A screenshot from Redfin shows a 2 bed, 1 bath East Palo Alto home for sale for $898,000. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

A screenshot from Redfin shows a 4 bed, 2 bath East Palo Alto home for sale for $1,300,000. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

A screenshot from Redfin shows a 4 bed, 2.5 bath East Palo Alto home for sale for $1,398,000. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

A screenshot from Zillow shows a 2 bed, 1 bath East Palo Alto home for sale for $848,000. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

A screenshot from Zillow shows a 5 bed, 3 bath East Palo Alto home for sale for $1,199,000. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

A screenshot from Redfin shows a 3 bed, 3 bath East Palo Alto home for sale for $1,200,000. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

A screenshot from Zillow shows a 2 bed, 2 bath East Palo Alto condo for sale for $829,888. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

A screenshot from Zillow shows a 3 bed, 1 bath East Palo Alto home for sale for $879,000. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

A screenshot from Zillow shows a 3 bed, 1 bath East Palo Alto home for sale for $989,000. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

A screenshot from Zillow shows a 3 bed, 1 bath East Palo Alto home for sale for $849,000. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

A quarter-century ago, it was the murder capital of the United States.

Now East Palo Alto is about to become the Bay Area’s latest city of million-dollar homes, a turnabout wrought by the region’s inexorable housing shortage.

Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. Morgan Hill, Alameda, Newark and Daly City are other Bay Area cities expected to soon strike seven-figure values.

East Palo Alto Mayor Ruben Abrica saw a mixed blessing for his city crossing the $1 million threshold. The city collects more taxes to provide services, and many long-time home owners have reaped the benefits of selling in the hot market, he said. But federal statistics show only one-third of East Palo Alto homes are owner-occupied, leaving a large population of renters left out of the real estate boom.

“It is a very strong reminder that we have to keep doing everything we can to preserve housing for the middle class, the working class,” said Abrica, who helped found the city in 1983. “That’s who we are.”

East Palo Alto will be joining an exclusive club in the U.S. — just under 200 communities in the country boast home values over $1 million. About one-third of those communities are in the Bay Area, with San Martin, Milpitas and San Jose recently added to the list.

The median home value nationally is $217,300, according to Zillow. The San Francisco and Oakland metro area has a median home value of $953,000, while the San Jose metro checks in at $1.3 million.

East Palo Alto has geographical advantages — set near the heart of Silicon Valley between wealthy Palo Alto and Menlo Park, easy access to U.S. 101 and Facebook’s expanding tech campus on its border.

But city educators say about 40 percent of the children in the Ravenswood City School District are considered homeless. The school district has expanded food pantry programs and built a free laundromat for needy families.

Vehicles belonging to homeless people relocated along Pulgas Ave. after being kicked out of Weeks St. in East Palo Alto, California, on Wednesday, Nov. 15, 2017. East Palo Alto police gave homeless people living in RVs and their cars less than 24 hours notice to vacate Weeks St. which is the site of the future Chan Zuckerberg Primary School. (Gary Reyes/ Bay Area News Group)

Pedestrians cross University Ave. at Bay Rd. in East Palo Alto, California, on Wednesday, Dec. 20, 2017. Over the past 25 years, East Palo Alto has evolved from having the highest per capita homicide rate in 1992 to one homicide in 2017. (Gary Reyes/ Bay Area News Group)

Community activists, including Duane Goff, center, prevent a tow truck from entering Weeks St. to protect homeless folks that live in vehicles from being kicked out of the neighborhood in East Palo Alto, California, on Wednesday, Nov. 15, 2017. East Palo Alto police gave homeless people living in RVs and their cars less than 24 hours notice to vacate the street which is the site of the future Chan Zuckerberg Primary School. (Gary Reyes/ Bay Area News Group)

Signs on Weeks St. warn homeless folks that live in vehicles will need to leave the neighborhood in East Palo Alto, California, on Wednesday, Nov. 15, 2017. East Palo Alto police gave homeless people living in RVs and their cars less than 24 hours notice to vacate the street which is the site of the future Chan Zuckerberg Primary School. (Gary Reyes/ Bay Area News Group)

A lone, inoperable RV remains on Weeks St. as homeless folks that live in vehicles were kicked out of the neighborhood in East Palo Alto, California, on Wednesday, Nov. 15, 2017. East Palo Alto police gave homeless people living in RVs and their cars less than 24 hours notice to vacate the street which is the site of the future Chan Zuckerberg Primary School. (Gary Reyes/ Bay Area News Group)

Community activists prevent a tow truck from entering Weeks St. to protect homeless folks that live in vehicles from being kicked out of the neighborhood in East Palo Alto, California, on Wednesday, Nov. 15, 2017. East Palo Alto police gave homeless people living in RVs and their cars less than 24 hours notice to vacate the street which is the site of the future Chan Zuckerberg Primary School. (Gary Reyes/ Bay Area News Group)

And the city’s violent history is never far enough past. It had the highest per capita murder rate in the country in 1992, when drug wars tindered violence in the small city and led to a homicide almost every week.

Omar Kinaan, an agent with Golden Gate Sotheby’s International, said buyers look to East Palo Alto for investment properties or good values. Bay Area home shoppers with $1 million to spend have fewer choices, he said.

Real estate agent Catherine Gortner started selling homes in East Palo Alto in 2003 to Stanford doctors and other professionals. Her mix of clients moving into University Square has become dominated by tech workers drawn by short commutes and bigger homes.

Many families send their children to private schools or surrounding districts through a transfer lottery, she said.

Many of her original clients would have trouble affording East Palo Alto today, Gortner said. “It’s not surprising,” she said. “It’s not just East Palo Alto — it’s everywhere. That’s why people are leaving the Bay Area.”

Louis Hansen covers housing issues for the Bay Area News Group and is based at The Mercury News. He's won national awards for his investigations and feature stories. Prior to joining the organization, he was an investigative reporter at The Virginian-Pilot, where he covered state government, the military and criminal justice.

With lower home prices, more Californians could afford a home purchase in the fourth quarter of 2018 compared to the previous quarter, but the California Association of Realtors reports higher interest rates lowered affordability from the previous year for most counties.